The outlook for Europe’s natural gas market this winter is tighter than many had expected as the continent’s storage levels are 12 percentage points lower than a year ago, Equinor’s finance chief told Reuters on Wednesday.
The Norwegian company in 2022 overtook Russia’s Gazprom as Europe’s biggest supplier of natural gas when Moscow’s full-scale invasion of Ukraine upended decades-long energy ties.
“We’re entering this winter in a market that is tighter than many people think,” Torgrim Reitan said in an interview on the sidelines of the company’s earnings presentation.
Europe is entering the winter season, when demand is highest, with gas storage 83% full, 12 percentage points lower than last year, he said.
“So if you see a colder winter than last year, this can actually be quite a movement in the prices,” Reitan said.
Europe’s ban on Russian liquefied natural gas by 2027 will remove 17 billion cubic metres of supply, tightening the market, with Equinor also expecting an annual 3% rise in Asian LNG demand, he added.
LOWER GAS PRICE OUTLOOK ON MORE LNG SUPPLY
Further ahead, the next years will see a lot of new LNG supply coming to the market and Equinor has lowered its long-term gas price outlook, to $8/MMBTU in 2030 from around $9/MMBTU now, Reitan said.
Earlier this week, the International Energy Agency said a record wave of new LNG capacity coming online before 2030 was set to transform gas market dynamics by strengthening global supply security and easing market pressure.
However, U.S. domestic power consumption is set to rise on demand from data centres and AI, which will also impact gas demand for power and utility bills there, Reitan said.
“So that might put restrictions on LNG exports,” he added.
Earlier, Equinor posted a bigger-than-expected drop in third-quarter profit as oil and gas prices fell, and booked asset impairments on a weaker long-term outlook for crude oil prices.
(Reporting by Nora Buli. Writing by Terje Solsvik. Editing by Gwladys Fouche and Mark Potter)